Student lending is his specialty

Jonathan Vogel's career has spanned the legal spectrum, from advising banks to prosecuting bankers accused of financial fraud.

Vogel, 37, is a partner at Sonnenschein Nath & Rosenthal in Charlotte, where he specializes in student lending issues, as well as white-collar investigation and litigation.

Before joining the firm last year, he spent nearly eight years with the federal government, including roles with the U.S. House of Representatives' judiciary committee, the U.S. Department of Justice and the U.S. Department of Education, where he served as deputy general counsel.

Vogel came to Charlotte in 2005 as an assistant U.S. Attorney for the Western District of North Carolina, where he prosecuted financial fraud cases. Now, he uses his government experience to help companies and individuals navigate government investigations and legal compliance issues.

Vogel spoke with the Observer about lending, identity theft and the legal market. Questions and answers have been edited for brevity and clarity.

Q: A recent bust was called the largest U.S. identity theft prosecution. Is the issue getting more attention than in the past?

The president formed an identity theft task force a few years back that came out with recommendations on prosecution and things like that. It's getting increasingly more attention from federal and state lawmakers and prosecutors. People are responding to victims.

Q: What kinds of cases did you see as a prosecutor?

I saw a lot of low-tech identity theft crimes. For example, I prosecuted several cases involving mail theft – simply, the alleged criminals stole mail that people had put in their mailboxes and committed fraud using the identity information.

In one case, I prosecuted a former employee of a big bank in Charlotte who was entrusted to help bank customers with fraud. Instead, this person ordered a new credit card on a customer's account and went on a spending spree with one of his co-workers. … I found that juries can really relate to identity theft cases.

Q: Student lending has been in the news lately, with some predicting a lending crisis. Is a crisis imminent?

There is a concern, as we approach the new school year, about whether students, even if they are able to obtain a federally guaranteed loan, will be able to obtain a private loan to cover the balance of their tuition and costs. In recent weeks, several lenders – Wachovia being chief among them – have decided not to make private loans to undergraduate students.

It's unclear whether there will be a college access problem. Career colleges, more than traditional four-year colleges, are going to be impacted the most, because the students that go to a career college are more likely to be low-income, perhaps, and yet still have high tuition.

Q: What led to the current student-lending situation?

The area of student lending has gone through quite a change in the last 1 1/2 years, beginning with investigations in early 2007 into alleged conflicts of interest between student loan companies and college financial aid offices, and then with federal legislation enacted last fall that cut back on federal subsidies paid to student loan companies that participate in federal loan programs.

Those things, together with the credit crunch, created a situation where student loan companies making federally guaranteed loans to students are now unable to turn much of a profit and are unable to obtain new funds to make additional loans.

Congress enacted legislation that gives the U.S. Department of Education the authority to purchase federal loans from lenders to provide student loan companies additional funds to make more loans. In other words, the government would step in where the marketplace has chosen not to operate in the last year. As a result, there are several student loan companies, including banks, that are deciding to continue to participate in the federal loan program.

But that's just federally guaranteed student loans, which provide students, on average, about $7,000 or $8,000 a year toward tuition or costs. Many students need to take out additional loans, private loans. These are not part of the new education department program. These loans typically come with a much higher interest rate, and lenders are requiring a higher credit score.

Q: What advice would you give a student worried about paying for school?

Start early. Speak to your college's financial aid office, get the names of lenders they recommend, lenders who will make a federal loan and lenders who will make a private loan, if needed. If possible, have a co-signer on your loans, like a parent, because that might make the loan more accessible and the interest rate better. If all that fails, I think a lot of students, perhaps beginning this fall, are going to have to go to schools that are perhaps not the school of their first or second choice, but a school that is more affordable.

Q: How will the election affect student lending issues?

The candidates have very different views on the federal student loan programs. Sen. Obama wants to eliminate the federal program that involves a partnership between the government and private-sector lenders in favor of a federal program in which the government is the sole lender of funds to make federal student loans. On the other hand, Sen. McCain favors the free-market solution and competition in student lending, and thus will likely seek to maintain the balance that is struck by having both federal student loans programs. Doing so would continue to enable schools to choose the program that is best for their students.

Jonathan Vogel's career has spanned the legal spectrum, from advising banks to prosecuting bankers accused of financial fraud.

Vogel, 37, is a partner at Sonnenschein Nath & Rosenthal in Charlotte, where he specializes in student lending issues, as well as white-collar investigation and litigation.

Before joining the firm last year, he spent nearly eight years with the federal government, including roles with the U.S. House of Representatives' judiciary committee, the U.S. Department of Justice and the U.S. Department of Education, where he served as deputy general counsel.

Vogel came to Charlotte in 2005 as an assistant U.S. Attorney for the Western District of North Carolina, where he prosecuted financial fraud cases. Now, he uses his government experience to help companies and individuals navigate government investigations and legal compliance issues.

Vogel spoke with the Observer about lending, identity theft and the legal market. Questions and answers have been edited for brevity and clarity.

Q: A recent bust was called the largest U.S. identity theft prosecution. Is the issue getting more attention than in the past?

The president formed an identity theft task force a few years back that came out with recommendations on prosecution and things like that. It's getting increasingly more attention from federal and state lawmakers and prosecutors. People are responding to victims.

Q: What kinds of cases did you see as a prosecutor?

I saw a lot of low-tech identity theft crimes. For example, I prosecuted several cases involving mail theft – simply, the alleged criminals stole mail that people had put in their mailboxes and committed fraud using the identity information.

In one case, I prosecuted a former employee of a big bank in Charlotte who was entrusted to help bank customers with fraud. Instead, this person ordered a new credit card on a customer's account and went on a spending spree with one of his co-workers. … I found that juries can really relate to identity theft cases.

Q: Student lending has been in the news lately, with some predicting a lending crisis. Is a crisis imminent?

There is a concern, as we approach the new school year, about whether students, even if they are able to obtain a federally guaranteed loan, will be able to obtain a private loan to cover the balance of their tuition and costs. In recent weeks, several lenders – Wachovia being chief among them – have decided not to make private loans to undergraduate students.

It's unclear whether there will be a college access problem. Career colleges, more than traditional four-year colleges, are going to be impacted the most, because the students that go to a career college are more likely to be low-income, perhaps, and yet still have high tuition.

Q: What led to the current student-lending situation?

The area of student lending has gone through quite a change in the last 1 1/2 years, beginning with investigations in early 2007 into alleged conflicts of interest between student loan companies and college financial aid offices, and then with federal legislation enacted last fall that cut back on federal subsidies paid to student loan companies that participate in federal loan programs.

Those things, together with the credit crunch, created a situation where student loan companies making federally guaranteed loans to students are now unable to turn much of a profit and are unable to obtain new funds to make additional loans.

Congress enacted legislation that gives the U.S. Department of Education the authority to purchase federal loans from lenders to provide student loan companies additional funds to make more loans. In other words, the government would step in where the marketplace has chosen not to operate in the last year. As a result, there are several student loan companies, including banks, that are deciding to continue to participate in the federal loan program.

But that's just federally guaranteed student loans, which provide students, on average, about $7,000 or $8,000 a year toward tuition or costs. Many students need to take out additional loans, private loans. These are not part of the new education department program. These loans typically come with a much higher interest rate, and lenders are requiring a higher credit score.

Q: What advice would you give a student worried about paying for school?

Start early. Speak to your college's financial aid office, get the names of lenders they recommend, lenders who will make a federal loan and lenders who will make a private loan, if needed. If possible, have a co-signer on your loans, like a parent, because that might make the loan more accessible and the interest rate better. If all that fails, I think a lot of students, perhaps beginning this fall, are going to have to go to schools that are perhaps not the school of their first or second choice, but a school that is more affordable.

Q: How will the election affect student lending issues?

The candidates have very different views on the federal student loan programs. Sen. Obama wants to eliminate the federal program that involves a partnership between the government and private-sector lenders in favor of a federal program in which the government is the sole lender of funds to make federal student loans. On the other hand, Sen. McCain favors the free-market solution and competition in student lending, and thus will likely seek to maintain the balance that is struck by having both federal student loans programs. Doing so would continue to enable schools to choose the program that is best for their students.

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